Have We Found the Bottom? (And What Will the Recovery Mean to Brand Advertisers?)
According to the advertising execs polled for the , 29% of them expect to increase their advertising budgets over the next 6 months, versus only 26% who said that two months ago. Still, 29% also plan to decrease their budgets over that period, but that’s also down from 30% in the same survey back in March.
“Digital media such as online display, online search and mobile are the strongest, with more than half of all respondents anticipating a boost in those ad budgets, while traditional media such as TV, radio, outdoor, newspapers and magazines all are still mainly in negative territory. The traditional medium to show the greatest relative improvement has been cable and broadcast TV, as print media and radio continue to wane.”
Speaking of search, Hitwise numbers show that the total traffic going to website via paid search ads is decreasing relative to traffic via unpaid, organic search listings (via ).
What’s this mean? It means that “direct response” marketing channels are peaking, as they say in . Marketers are buying as much guaranteed traffic as they can from Google, but users of search are becoming more likely (94.75% likely in May 2009, versus 90.16% likely in May 2008) to click on organic results over the paid search ads. Assuming Google’s PageRank algorithm is a fair proxy for relevance of one source of content — a brand — over another, marketers are facing an increasing need to earn relevance instead of buying it.
As we claw our way up from the bottom, expect that the recovery in online advertising will be driven by faster growth in brand-building activities over cost-per-click and other direct-response programs.
UPDATE: Comscore founder Gian Fulgoni says show that the percentage of clicks on paid search ads — the click-through rate — has not gone down (it’s stayed flat). Meanwhile, paid clicks are up only 18% over the past two years while search queries are up 68%. Among his explanations for the delta:
“search queries are actually getting longer and that as searchers become more experienced they are using more words per search query. And this apparently reduces the likelihood that an advertiser has bid to have his/her ad included in the results page from these longer queries, due to paid search advertising strategies that limit ad coverage, such as Exact Match, Negative Match, and bid management software campaign optimization.”
Longer queries, though, won’t make organic brand relevance any less important. If you’re McDonalds and web customers search for phrases such as “mcdonalds quarter pounder with cheese 94110,” McDonalds no longer needs to buy paid ads to reach that customer. But if longer queries look more like “healthy salad lunch options 94110,” it needs to make sure it is considered a relevant brand in that conversation.